A total of 20.74 million tons of crude steel and steel products were produced in Iran during the first five months of the current fiscal year (March 21-Aug. 22), registering an 8.67% decline compared with 22.71 million tons in the corresponding period of last year, according to latest data released by the Ministry of Industries, Mining and Trade.
Crude steel production stood at 10.88 million tons during the period, registering a 6.8% year-on-year decline.
Iranian steelmakers produced 9.86 million tons of steel products during the same period, 10.6% less YOY.
The decline in production is the upshot of blackouts and power supply restrictions of the past few months.
In a letter to the Supreme National Security Council, the Iranian Steel Producers Association put steel mills’ losses due to power outages at $6 billion from the beginning of the current Iranian year (March 21) to Sept. 12.
According to ISPA, 82 complete days of production were lost during the period due to power outages and 300,000 direct and indirect jobs were lost or restricted, the news portal of the association (Steeliran.org) reported.
Summer demand led to severe power and water shortages in most regions, resulting in blackouts and dry taps.
Electricity consumption on June 20 surpassed 62,000 MW.
The record came as high temperatures nationwide drove general electricity consumption to new heights, prompting authorities to prioritize domestic users over industries in supplying power.
As the manufacture of steel and cement are energy-intensive operations, related factories were restricted by the Iran Power Generation, Distribution and Transmission Company (locally known as Tavanir) and have been only allowed to work at a fraction of their capacity during specific hours of the day.
The abrupt ban on the two key sectors created shortages of steel and cement in local markets and prices increased overnight, creating new problems for most construction sectors.
Rasoul Khalifeh-Soltani, the head of Iranian Steel Producers Association, said power outages shut down 85% of steel production.
Underlining the hefty losses incurred by steelmakers, ISPA called for supportive measures to compensate for at least part of the losses through a steady supply of gas throughout autumn and winter, and deferral of loan repayments, debts, bills and tax dues for at least six months.
Deputy Industries Minister Saeed Zarandi recently estimated losses caused by power outages for steel mills (only those falling under the Iranian Mines and Mining Industries Development and Renovation Organization) to have reached $235 million a week.
Iran is pursuing the target of becoming the world’s sixth largest steel producer as per the 20-Year Vision Plan, which targets annual production capacity expansion to 55 million tons and 20-25 million tons of exports per year by 2025.
“To achieve the goal of 55 million tons per year steel production capacity, we have a shortage of at least 5,000 megawatts of electricity,” Zarandi was quoted as saying by Mehr News Agency.
Noting that production conditions were satisfactory until the third month of the current fiscal year (June 22-July 22) before facing the challenges of electricity supply and power outages, Zarandi said, “In the past three months, due to a lack of electricity supply to production units, especially in the cement and steel sectors, we bumped into problems.”
“Following a decline in temperature and electricity consumption by domestic users, in addition to growing action against illegal crypto miners, restrictions on power supply to the industrial sector have been lifted,” Mostafa Rajabi Mashhadi, spokesman for the Iran Power Generation, Distribution and Transmission Company, told IRNA last week.
The Industries Ministry’s report also shows 121,800 tons of copper cathode were produced in the five months under review, 1.4% more year-on-year, in addition to 222,600 tons of aluminum, 30.6% more year-on-year.
Alumina, coal and cement production registered a YOY decline of 6%, 4.1% and 10.6% with the production of 96,400 tons, 615,300 tons and 26.43 million tons respectively.
